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Federal Register / Vol. 86, No. 211 / Thursday, November 4, 2021 / Rules and Regulations DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 19, 22, 23, 25, 26, 27, 28, 29, 30, 31, 32, 37, 38, 39, 42, 43, 44, 46, 47, 49, 52, and 53
FAC 202201; FAR Case 2018018; Item I; Docket No. FAR20180018, Sequence No. 1
RIN 9000AN76

Federal Acquisition Regulation:
Revision of Definition of Commercial Item Department of Defense DoD, General Services Administration GSA, and National Aeronautics and Space Administration NASA.
ACTION: Final rule.
AGENCY:

DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation FAR to implement a section of the John S.
McCain National Defense Authorization Act for Fiscal Year 2019 to change the definition of commercial item.
DATES: Effective December 6, 2021.
FOR FURTHER INFORMATION CONTACT: Ms.
Zenaida Delgado, Procurement Analyst, at 2029697207 or by email at zenaida.delgado@gsa.gov, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 2025014755 or GSARegSec@gsa.gov. Please cite FAC
202201, FAR Case 2018018.
SUPPLEMENTARY INFORMATION:
SUMMARY:

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I. Background DoD, GSA, and NASA published a proposed rule at 85 FR 65610 on October 15, 2020, to amend the FAR
definition of commercial item to implement section 836 of the John S.
McCain National Defense Authorization Act NDAA for Fiscal Year FY 2019
Pub. L. 115232. Section 836 separates the definition of commercial item at 41 U.S.C. 103 into the definitions of commercial product and commercial service, at 41 U.S.C. 103 and 103a.
Splitting the definition of commercial item into the definitions of commercial product and commercial service was a recommendation made by the independent panel created by section 809 of the NDAA for FY 2016 Pub. L.
11492. The panel was created to
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review and improve the functioning of the defense acquisition system and eliminate any regulations found unnecessary to achieve such improvements. The panel recommended the splitting of the definition of commercial item to better reflect the significant roles services and commercial services play today in the DoD procurement budget. See recommendation on pages 29 to 30 of Volume 1 of 3 dated January 2018 of the Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations, available at https
section809panel.org/wp-content/
uploads/2018/04/Sec809Panel_Vol1Report_Jan18_REVISED_2018-0314.pdf.
The change in this final rule resolves the issue the Section 809 Panel cites, which is that the acquisition workforce has faced issues with inconsistent interpretations of policy, confusion over how to identify eligible commercial products and services. Bifurcating the definition of commercial item into commercial product and commercial service is a way to provide clarity for the acquisition workforce, which may result in greater engagement with the commercial marketplace.
It is important to note that the amendment to separate commercial item into commercial product and commercial service does not expand or shrink the universe of products or services the Government may procure using FAR part 12, nor does it change the terms and conditions with which contractors must comply.
The following summarizes the changes made to the FAR:
1. Removed from FAR part 2 the definition of commercial item and replaced it with the definitions of commercial product and commercial service in accordance with the NDAA
with only minor revisions for clarification to align with that which is currently in the FAR. The clarification in paragraph 3ii of the definition of commercial product has been in FAR
part 2 since the definition of commercial item was incorporated by FAR case 94790, Acquisition of Commercial Items, in 1995. Paragraphs 2i and 2ii of the definition of commercial service are also long standing; they stem from a FAR change published October 22, 2001, which was revised slightly in a FAR change published June 18, 2004.
2. Replaced all instances of noncommercial and noncommercial with other than commercial as it relates to this rule. This editorial change provides consistent language throughout the FAR.

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3. Removed FAR 12.102g, and a corresponding reference at FAR
37.601c, as obsolete. FAR 12.102g only applied to contracts or orders entered into before November 23, 2013.
4. Added the definition of established price at FAR 16.001 to be consistent with the term as defined at the FAR clauses at FAR 52.2162, Economic Price AdjustmentStandard Supplies, and 52.2163, Economic Price AdjustmentSemistandard Supplies.
This is an editorial change for consistency to have the definition in both the clause and the corresponding FAR part.
5. Made conforming changes to cross references, and the following Standard Forms SF: SF 294, Subcontracting Report for Individual Contracts; SF
1443, Contractors Request for Progress Payment; and SF 1449, Solicitation/
Contract/Order for Commercial Products and Commercial Services. Also, minor editorial changes were made as needed throughout the FAR. These revisions do not impact terms and conditions of commercial contracts or how the Government procures commercial products or commercial services.
Three respondents submitted comments on the proposed rule.
II. Discussion and Analysis The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council the Councils reviewed the public comments in the development of the final rule. A
discussion of the comments and the changes made to the rule as a result of those comments are provided as follows:
A. Summary of Significant Changes There are no significant changes from the proposed rule.
B. Analysis of Public Comments Of the three responses received, none provided negative comments on the rule, although they suggested changes as described below. No changes resulted from the public comments.
Comment: A respondent expressed that paragraph 1 of the commercial product definition in the proposed rule is not consistent with the language in 41
U.S.C. 1031. This respondent stated that while the wording for both definitions is very similar, the structure of the definition as promulgated in current law indicates it was the intent of Congress that for a product to meet the definition of a commercial product under paragraph 1, it must have been sold, leased, or licensed, or offered for sale, lease, or license, to the general public.

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